Want to be a wicked smart marketer? Here’s the high level summary.
This is my approach, honed over 20 years and $1B+ revenue in ecommerce, distilled into five bullets.
A customer-focused, data-driven approach to profits
- The goal of your business is to grow profits. Let’s start with the basics: the more cash your business throws off over time, the more someone will pay you for it. Conversely, the #1 reason businesses fail is that they run out of cash. Your goal, young Jedi, is to generate and maximize cash flow. This will create profits. (Read: Cash is Oxygen, It’s All About ROI, You Haven’t Won When You Get That VC Check, Marketing Productivity.)
- To maximize profits, maximize customer lifetime value (CLV). CLV is the sum total of profits generated by a customer with your business. Maximize that per customer. Maximize it in aggregate. You do this, you will ultimately make your business more profitable. Moreover, think of your business moves as investments of time and effort. Always invest in the projects with the highest ROI. (Read: You Max CLV, You Win, Customer Value Optimization: The Formula for Epic Growth, Marketing Productivity.)
- To maximize CLV, focus on your best customers. The hidden secret of most busineses is that there’s an 80 20 Rule in everything. 20% of your products drive 80% of the revenue 20% of your customers drive 80% of the profit. At Nerd marketing we call these your whales. They punch above your weight. And guess what: 9 times out of 10, it costs the same to acquire a whale as it does a minnow. To grow your profits, acquire, nuture, and retain more whales. It’s easier, less expensive and will directly lead to increased overall CLV and profits.
- To identify your best customers, look to R and F. How do you know who your best customers are? Do you profile them? Look at gender, age, political party? No–you look at their behavior. How much have they interacted with you in the past. How long since they have last interacted. And ultimately how much they have spent with you. This is RFM and it’s the essence of database marketing.
- CLV should inform all elements of your business. This is the bulk of the content on the blog. Examples of data-driven approaches across Marketplaces, Retention, Acquisition, FB, etc. Heavy dose of CLV/RF throughout.